Crescent Point Energy Corp. CPG-T has inked another blockbuster deal in the Canadian oil patch, solidifying its place as the dominant player in the Montney, one of North America’s largest unconventional petroleum plays.
The Calgary-based oil and gas company announced Monday it will purchase Hammerhead Energy Inc. HHRS-T , a Calgary-based energy company with assets in the Montney region of northwest Alberta, for a total of $2.55-billion, including approximately $455-million of Hammerhead’s net debt.
The deal will see Crescent Point acquire approximately 105,000 acres and 800 drilling locations in the region, immediately making Crescent Point the largest landowner in the Alberta Montney’s volatile oil fairway.
The company is already the largest landowner in the adjacent Kaybob Duvernay shale play.
The purchase will also see Crescent Point become Canada’s seventh-largest oil and gas exploration and production company by volume, with production expected to total over 200,000 barrels of oil equivalent per day once the deal is closed.
In the Montney specifically, the deal will result in Crescent Point increasing its production in the region by 56,000 boe/d in 2024, to 94,000 boe/d – nearly half of the company’s overall estimated production for next year.
The deal, which includes approximately $455-million of Hammerhead’s net debt, will see Hammerhead shareholders receive $21 per fully diluted common share, through a combination of approximately $1.5-billion in cash and 53.2 million common shares of Crescent Point.
The deal is expected to close in December, 2023.
“As you can tell, we’re very excited about this strategic consolidation opportunity, and the future outlook for the company,” said Crescent Point chief executive officer Craig Bryksa on a conference call to discuss the acquisition Monday.
“We believe this acquisition solidifies the company’s future outlook by establishing a dominant position in one of North America’s premier reservoirs.”
Crescent Point has been on a buying spree recently as it has sought to optimize its asset portfolio. Earlier this year, the company snapped up Spartan Delta Corp.’s assets in the Montney for $1.7-billion.
The Montney and the Kaybob Duvernay represent what Crescent Point believes are its greatest opportunity. In August, the company announced it would sell off its North Dakota assets to focus more on the Montney and Duvernay.
In 2021, Crescent Point acquired Shell Canada’s Kaybob Duvernay assets for $900-million in 2021 and has made additional purchases since.
There have been a string of high-profile deals in Canada’s energy sector this year.
Other acquisitions of note include ConocoPhillips’s approximately $4-billion purchase of TotalEnergies’ Surmont oil sands project; Suncor Energy Inc.’s $1.47-billion acquisition of Total’s stake in the Fort Hills oil sands mine and Tourmaline Oil Corp.’s purchase of Bonavista Energy Corp. for $1.45-billion.
The wave of consolidation is in part the result of two years of strong commodity prices. Many companies are flush with cash and have rapidly been paying down debt, giving them a strong enough balance sheet to pursue growth through acquisitions.